Buyers FAQ

Buying a home can seem like a daunting task, especially if it is your first time. My goal is to provide support and information to make the process easier. Below I answer some frequently asked questions. Please feel free to contact me anytime!

What do I do first? Before looking for a home, it is important to get pre-qualified/approved to determine your price range, down payment amount, and estimated settlement charges. Lenders use different variables including income, debt load and credit scores to determine how much a potential buyer can take out as a mortgage. Then, it is important to decide if you are comfortable with the amount you will be paying monthly at that price.

What is the difference between pre-qualification and pre-approval?
• Pre-qualification is an informal way to see how much you may be able to borrow. It can be done over the phone without documentation by telling a lender your income, debts, and an amount you can provide for down payment.
• Pre-approval is when a lender gives a commitment to lend the money after assembling financial records. It shows sellers you are serious about buying.

Where do I find a loan? Ginnie Mae recommends that first-time homeowners consult with several lenders before applying formally for a loan. Every lender offers different interest rates and fees, and those can impact your monthly mortgage payment. By shopping with different lenders you can find the best possible deal. Consult different types of financial institutions, including mortgage brokers, credit unions, savings and loans, traditional banks and government lenders.
How much money do I need to buy a home? It depends on a number of factors, including the cost of the house and the type of mortgage you get. In general,you are responsible for two upfront costs:
• earnest money – a small deposit you make when you submit your offer to prove to the seller that you are serious about buying the home.
• down payment – a percentage of the cost of the home that you must pay when you go to settlement. Lenders have different requirements for down payments.
The other cost associated with buying a home is closing costs – the costs for processing the paperwork to buy a house. When you make an offer on a home, your real estate agent will put your earnest money into an escrow account. If the offer is accepted, your earnest money will be applied to the down payment or closing costs. If your offer is not accepted, your money will be returned to you. When you apply for your loan, your lender will give you an estimate of the closing costs, so you won’t be caught by surprise.

How much will my REALTOR cost? Most people think they have to pay a sales commission. The truth is this: only the seller pays the commission. Whether a buyer uses an agent or not, the seller still pays the commission, so buyer agent’s services are free to the buyer.

What is the difference between foreclosure and short sale?
• A foreclosure is the last resort for a homeowner when they default on their monthly mortgage payments. The bank or lender initiates foreclosure procedures and eventually repossesses the property. The bank now owns the property and must try to sell it on the open market. A foreclosed home is basically the same process and time frame as purchasing a standard sale home.
• A short sale happens when a homeowner finds themselves falling behind on their mortgage payments and they are sure they will not be able to catch up. Instead of foreclosing, they will try to sell the property for less than the mortgage amount owned. The homeowner will need to get the approval of their bank or lender. Not all lending institutions agree to short sales as they lose out on the total sale price. When a buyer has found a short sale home they want, they must place a bid which will be submitted with the rest of the paperwork to the lender. When the bank or lender decides that all is in order, it will withdraw whatever liens have been put on the property, and the sale can go through. This can take anywhere from 30 days to 6 months.
• Foreclosures and short sales can be purchased at below-market rates, but sometimes the condition of the house, outstanding taxes, or timeline can be a downside.

What is Title Insurance? It provides coverage for certain losses due to defects in that title that, for the most part, occurred before your ownership. Title insurance protects against defects such as prior fraud or forgery that might go undetected until after closing and possibly jeopardize your ownership and investment. The cost varies, depending mainly on the value of your property, but the important thing to remember is that you only pay once.

What is Escrow? Escrow is the process of having a neutral third party manage the exchange of money for real property. In the home buying process, escrow opens when the buyer and seller sign a purchase agreement and the buyer puts down a deposit. Escrow protects all parties involved by making sure that no funds or properties change hands until all conditions in the agreement have been met.

Let me know what other questions you might have by leaving a comment or contacting me via phone call or text 760.390.6330, or email me janai@north-county-homes.com. In the meantime, follow me on Facebook for additional tips and information.